Videos
Requirement-1:
To Calculate:
The Return on Total Assets of Samsung for the two most recent years
Requirement-1:
Answer to Problem 3AA
The Return on Total Assets of Samsung for the two most recent years is as follows:
| Samsung | ||
| Current Year | 1 Year Prior | |
| Return on Total Assets | 15.0% | 9.0% |
Explanation of Solution
The Return on Total Assets of Samsung for the two most recent years is calculated as follows:
| Samsung | ||
| In Millions | Current Year | 1 Year Prior |
| Net Income (A) | 42,186,747 | 22,726,092 |
| Beginning Total Assets (B) | 262,174,324 | 242,179,521 |
| Ending Total Assets (C) | 301,752,090 | 262,174,324 |
| Average Total Assets (D) = (B+C)/2 = | 281,963,207 | 252,176,923 |
| Return on Total Assets =(A/D) = | 15.0% | 9.0% |
Concept Introduction:
Return on total Assets:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Profit Margin Ratio:
Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-2:
If Return on Total Assets of Samsung for current year is better or worse than Apple and Google
Requirement-2:
Answer to Problem 3AA
The Return on Total Assets of Samsung for current year is better than Apple and Google both.
Explanation of Solution
The Return on Total Assets of Samsung, Apple and Google for the Current year is calculated as follows:
| Samsung | Apple | |||
| In Millions | Current Year | Current Year | Current Year | |
| Net Income (A) | 42,186,747 | 48,351 | 12,662 | |
| Beginning Total Assets (B) | 262,174,324 | 321,686 | 167,497 | |
| Ending Total Assets (C) | 301,752,090 | 375,319 | 197,295 | |
| Average Total Assets (D) = (B+C)/2 = | 281,963,207 | 348,503 | 182,396 | |
| Return on Total Assets =(A/D) = | 15.0% | 13.9% | 6.9% | |
The Return on Total Assetsof Samsung is highest for the current year; hence return on Total Assets of Samsung for current year is better than Apple and Google both.
Concept Introduction:
Return on total Assets:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Profit Margin Ratio:
Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-3:
To Calculate:
The Profit Margin of Samsung for the current year
Requirement-3:
Answer to Problem 3AA
The Profit Margin of Samsung for the current year is 17.6%
Explanation of Solution
The Profit Margin of Samsung for the current year is calculated as follows:
| Samsung | |
| In Million | Current Year |
| Net Income (A) | 42,186,747 |
| Net Sales (B) | 239,575,376 |
| Profit Margin (C) = A/B = | 17.6% |
Concept Introduction:
Return on total Assets:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Profit Margin Ratio:
Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-4:
To Calculate:
The Total Asset Turnover of Samsung for the current year
Requirement-4:
Answer to Problem 3AA
The Total Asset Turnover of Samsung for the current year is 0.85
Explanation of Solution
The Total Asset Turnover of Samsung for the current year is calculated as follows:
| Samsung | |
| In Million | Current Year |
| Net Income (A) | 42,186,747 |
| Net Sales (B) | 239,575,376 |
| Profit Margin (C) = A/B = | 17.6% |
| Beginning Total Assets (D) | 262,174,324 |
| Ending Total Assets (E) | 301,752,090 |
| Average Total Assets (F) = (D+E)/2 = | 281,963,207 |
| Asset Turnover Ratio (G) = B/F= | 0.85 |
Want to see more full solutions like this?
Chapter 15 Solutions
FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS
- What is the accounting entry to close the sole proprietorship drawing account?arrow_forwardWhat is the result of the following transaction for Company A? Company A’s customer is unable to pay for a previous credit sale in accordance with Company A’s 90-day payment terms. The customer makes a promissory note to Company A that extends payment over a 24-month term including 5% interest. No result because the customer didn’t pay. Accounts receivable increases because of the interest. A note receivable is recorded in non-current assets. Company A records the loan as a liability.arrow_forwardThe income statement, which presents the results of operations, can be prepared in many forms including: Single Step Income Statement Condensed Income Statement Common Sized Income Statement All of the abovearrow_forward
- QUESTION 1 Rentokil Limited issued a 10-year bond on January 1 2011. It pays interest on January1. The below amortization schedule and interest schedule reflects this. Its year end isDecember 31. Requirements: a) Indicate whether the bonds were issued at a premium or a discount and explainhow you came to your decision. b) Compute the stated interest rate and the effective interest rate c) Prepare the journal entries for the following years:I. 2011, 2012 & 2018.arrow_forwardBlueberry Corp. plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 65 to 45, as well as reduce the ratio of credit sales to total revenue from 80% to 70%. The company estimates that projected sales will be 8% less if the proposed new credit policy is implemented. The firm’s short-term interest cost is 8%. Projected sales for the coming year are $32,000,000. Assuming a 360-day year, calculate the dollar impact on accounts receivable of Blueberry Corp. of this proposed change in credit policy.arrow_forwardCrane Company accumulates the following data concerning a mixed cost, using units produced as the activity level. Units Produced Total Cost March 9,970 $20,005 April 8,930 18,154 May 10,500 20,538 June 8,710 17,674 July 9,370 18,604 Using the information from your answer to above part, write the cost equation. (Round per unit produced answer to 2 decimal places (e.g., 2.25).) +A +$ per unit produced × Total costarrow_forward
- On the 5th of the month, Greg Marketing pays its field sales personnel a 3% commission on the previous month's sales. Sales for March 2016 were $1,200,000. What is the entry at the end of March to record the commissions? A. Debit Sales - 36,000$; Credit Sales Commission Expense - 36,000$ B. Debit Sales Commission Expense - 36,000$; Credit Sales Commissions Payable - 36,000$ C. Debit Sales Commission Expense - 36,000$; Credit Accounts Receivable - 36,000$ D. Debit Sales -36,000$; Credit Sales Commission Income - 36,000$arrow_forwardNet profit is calculated in which of the following account? A) Profit and loss account B) Balance sheet C) Trial balance D) Trading accountarrow_forwardThe debts which are to be repaid within a short period (a year or less) are referred to as, A) Current Liabilities B) Fixed liabilities C) Contingent liabilities D) All the abovearrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education